MITRA’s FY19 CNL of RM47.9m (versus FY18 CNP of RM44.9m) was narrower-than-expected compared with our net loss estimate of RM84m (but worse than consensus’ loss of RM37m). The reported bottom-line was essentially lifted by a positive tax charge of RM11.8m arising from the recognition of deferred tax asset. Going forward, we expect the Group to remain in the red. Maintain UNDERPERFORM with an unchanged TP of RM0.11 based on PBV multiple of 0.17x.

Skewed by tax item. FY19 CNL of RM47.9m (versus FY18 CNP of RM44.9m) was narrower-than-expected compared with our net loss estimate of RM84m (but worse than consensus’ loss of RM37m). The reported bottom-line was essentially lifted by a positive tax charge of RM11.8m, after recognising deferred tax asset on unabsorbed tax loss and capital allowance amounting to RM21.7m. No dividend was declared as expected.

Results’ highlight. The full-year performance was hit by the construction segment, which posted pretax loss of RM98.4m versus FY18 pretax profit of RM12.0m, mainly attributable to cost overruns, higher finance cost and depreciation charges. In addition, the property development division contributed lower pretax profit of RM31.3m (-34%) as FY18 benefitted from a compensation sum from compulsory land acquisition (of RM10.3m). QoQ, stripping out the tax impact, 4QFY19 saw pretax loss of RM22.2m (versus 3QFY19 pretax loss of RM27.8m and 4QFY18 pretax profit of RM14.5m). This comes as the construction segment remained in the red with quarterly pretax loss of RM33.0m (versus 3QFY19 pretax loss of RM34.8m and 4QFY18 pretax profit of RM0.9m).

Outlook. Outstanding construction order-book currently stands at RM714m while unbilled property sales are estimated at RM63.8m. Still, we expect its bottom-line to remain under pressure going forward amid the challenging construction and property markets.

Still in the red. Post results, we are keeping our FY20E net loss at RM104m and introduce net loss forecast of RM80m for FY21.

Maintain UNDERPERFORM with an unchanged Target Price of RM0.11. This is derived from a P/BV multiple of 0.17x (-1.5SD below its historical mean to reflect the challenging outlook) on its FY20E BV per share of RM0.68.

Upside risks for our call are: (i) higher-than-expected margins, (ii) better-than-expected billings from construction works and property segments, (iii) greater-than-expected contract wins.

Source: Kenanga Research - 28 Feb 2020